EDITORIAL: Carefully allocate taxes earmarked for energy upgrades

Gov. Jerry Brown’s plans for distributing new tax receipts to energy projects would combine dubious policy with inefficient spending. Sticking to that approach — as the governor’s newly revised budget does — sets the wrong course for using these tax proceeds. Legislators should instead craft a plan for allocating the funds that maximizes the return on taxpayers’ investment in energy upgrades at public facilities.

Voters in November approved Prop. 39, estimated to bring the state $1 billion annually from taxes on multistate corporations. Half of that tax money, for five years, has to go to energy efficiency and clean energy projects at schools, colleges and other public buildings. The governor’s May budget projects that $464 million will be available for such energy improvements in the next fiscal year.

The governor proposes to hand all of that tax money to schools and community colleges, parceled out on a per-pupil basis. Brown also wants to include the new funds for energy projects under the Prop. 98 school funding guarantee. Using the earmarked energy tax proceeds to meet the school guarantee would free up general fund tax dollars for other state budget uses.

But that approach serves neither schools nor taxpayers. The state’s legislative analyst warns that the governor’s approach invites greater manipulation of the Prop. 98 rules. The state does not need to add to its already long history of playing cynical games with the education funding guarantee, usually ending in litigation and costly state payouts. And in place of tax money districts could use for classroom operations, they would get dollars that could only go for energy projects.

Distributing the tax dollars on a per-pupil basis also ignores the differences between districts’ energy use. Instead of focusing on the biggest needs, the governor’s plan would simply give money to everyone with no consideration of schools’ existing conditions or whether improvements at other public buildings might generate more savings for taxpayers. Such an approach does not promote the most effective use of the tax funding.

Two legislative bills offer a better way to use the tax proceeds from Prop. 39: AB 39, by Assemblywoman Nancy Skinner, D-Berkeley, and SB 39 by Sen. Kevin de León, D-Los Angeles. Both bills would set up a competitive process for grants to school and community college districts for energy improvements, with the idea of targeting the money toward projects that offer the biggest payoff. Both bills would set aside money for projects at hospitals, universities and other public facilities, as well. While the bills still face legislative tinkering, they represent a more sensible approach than the governor’s ill-conceived plan.

Earmarking tax receipts for specific uses is generally poor policy that can hinder rational budget choices. But voters already signed off on targeting the Prop. 39 tax receipts, and legislators should ensure good value for that investment.

Automatic handouts will not achieve that goal. The Legislature should target the tax proceeds carefully, and not play political games with voters’ decision.